There is no doubt that the crypto market has been a bear market for some time now. Investors in crypto are in a state of uncertainty about where the crypto market is. There is a state of panic among investors because the high prices in the market are making trading with digital assets difficult. However, there is hope that the prices will shoot again since this isn’t the first time crypto has fluctuated. Earlier in May 2022, the Ugandan government thought of banning crypto concerning many people being scammed.
Bitcoin has been a store of value over time, and it’s claimed to be digital gold. The government of Uganda warned that allowing crypto has had impacts on illicit goods, money laundering, and also deals that are fraudulent in the country. The Ugandan government has taken a step to update the anti-money laundering Act to put under the same umbrella those who provide digital assets.
Crypto is unregulated, making transactions easier, and many invest in crypto to enjoy the ease of trading with crypto. On the other hand, un-regulation has attracted both investors and scammers. This is why many have landed in the trap and termed crypto as a scam. But here is the question “What could the discovery of gold mean for the crypto in Uganda?”. Will crypto investors go to invest in gold, or will the government ban crypto for good and have investors shift to gold because it’s regulated and easy to track down?
There is a need to protect the citizens from incurring losses, and gold could be the solution. There are 31m tons of gold found in Uganda, which means that its supply is more than that of crypto. With only a 21m supply of bitcoins, the gold supply will outperform digital assets. This means that everyone will shift to gold to evade crypto uncertainties.
Effects of gold on crypto
There have been fluctuations in prices crypto market of late. The discovery of Gold in Uganda could largely impact cryptocurrency. However, the availability of Gold in Uganda does not solely mean withdrawal from crypto. An increase in supply leads to a decrease in demand hence a decline in prices. There are investors in cryptocurrency for whom crypto means the world, and therefore, they remain opportunistic in every situation. People choose to trade with what they have known for a longer period. The supply of gold in larger quantities could lead to a price decline, which would give crypto hype again. Many would also consider crypto due to this.
Why Gold?
Gold has been dominating the market before cryptocurrencies. This could be the reason for opting out of crypto.
- Gold is highly stable because it is tied to other assets. It is a currency that is international and cannot be diluted. Crypto keeps fluctuating, and gold’s stability will have people withdraw from crypto and run to gold. Instability in crypto prices brings uncertainty to crypto markets and makes it difficult to predict the best times to buy and sell.
- Trading with gold is regulated. The regulation determines the rise in prices, and it is difficult to hike them. Crypto is unregulated, and this feature gives room for a price hike because there is no one to question. People find gold much more reliable because of regulation, unlike investing in crypto, which calls for investing in what one can afford to lose.
- It is good for both short- and long-term investment. Gold allows short and long-term investment, unlike crypto, where it’s mostly good to invest for the long term.
- There are more established ways of trading gold than crypto. Gold is accepted worldwide. Trading digital currencies are limited to some extent because some countries do not accept their use. Even though it’s acceptable in a county, it cannot be used in all sectors. The institution’s adoption is also low. Therefore, the availability of gold in plenty will have people invest in it.
The presence of gold in Uganda could drive crypto both to the rise and fall. Bear markets in crypto would also mean withdrawal to gold which is more known than crypto. Both crypto and gold are assets that have significant importance compared to traditional currencies. People use them to diversify their portfolios.
The discovery of a large amount of gold could greatly impact digital currencies. There is likely to be a huge turn to gold because the supply is adequate. The crypto market has crashed, and the market is bear. The stability is high, and government involvement means the market is safer.
